Every Company Needs a Good Map

I don't mind writing business plans. It wasn't always that way. It took a lot of time and I had other things I felt I needed to do. There was software to write and sales calls to make. All the while funds were diminishing. I knew we were going to need an investment but I just figured I would explain the business when someone needed to know. I learned that no one is going to sit and ask you questions until they get all of the answers they need.

I have been working on a couple of business plans with entrepreneurs in the past week that kind of drive me crazy. These would be millionaires want someone to do all the work for them. I should write their plan because they can't be bothered. As I see it, my role is to take their vision, their plans, and their financial projections and make a cohesive story out of it. Mind you, these are simple 15 - 20 page plans, not major corporate strategy papers. It is difficult to make much of a story about a business with out any of the aforementioned items.

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I can research a market but they should already know it or they should not be in it. I could call their accountant and get all of the pertinent financial information but they should be able to give it to me. Too often, I spend more time counseling about proper business management than I get to talk about presentation. If the plan writer does all of the work, then why not hire that person to run the company too? If you cannot answer the questions on your own, then how are you going to run the business?

Investors are looking for reasons to NOT invest in your company. They have a hundred plans as good or better looking than yours just waiting to be reviewed. They want to see if they can find the flaw in your business quickly and move on to the next plan. Don't give them that by having incomplete information. A plan writer is a collector or organizer of the information but it is your responsibility to know the material. How are you going to stand before investors and answer questions if you do not have first hand knowledge of the business and its environment?

I get the feeling that novices think that the investor should do all of the work. Perhaps the entrepreneur feels that their business is so great that the investor is the one who will get the best deal just because they get to invest. It just does not work that way. First off, less than 1% of those who seek funding ever get any. Then less than 20% will actually payback the investment in full or in excess. With those kind of odds investors cannot afford to go door to door looking to comb through shoeboxes and computer files to see if the company makes financial sense.

If you are thinking about raising money, then do yourself a favor and get your act together. Know your market - size, competition, and risks. Know your financial condition - top line, bottom line, and cash flow. Know your operation - sales, marketing, manufacturing, and administration. Know your story - who, what, where, when, how, and why your business exists. Invest the time if you want someone else to invest the money!

You may not feel comfortable writing a formal business plan any more than you feel comfortable writing advertising copy. It is a good idea to get help. An advertiser should not be expected to figure out what is great about your product or company, nor should a business plan writer be expected to know your business better than you do.

Did I mention, people are not looking to invest in just anything? They are looking to make money from lending you the cash you need to build value. If you cannot say what value you offer in a clear way with a financial model that supports it, then don't waste time trying to raise money. Just go out and start selling and hope you sell more than you spend. If you have a sufficiently profitable business, then you can hire an accountant and an investment search team to do all of that other dirty work for you.

Am I wrong here?

How much money would you expect to raise with a plan that you contribute very little to formulate?